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NJ failing to keep tabs on contractors, Rutgers study finds

Halfway house.JPG

A Rutgers University study released today has found that New Jersey has failed to properly keep tabs on contractors. Here, a dorm at a halfway house in Camden is pictured. Some 5,100 inmates escaped from New Jersey's privately run halfway houses, not pictured, since 2005, according to reports..
(Noah K. Murray/The Star-Ledger)

While New Jersey turns to outside firms to provide more public services it is failing to adequately supervise those contractors, a new study finds, putting taxpayer money and the welfare of residents at risk.

The Rutgers University study released yesterday reviewed New Jersey’s process for procuring and overseeing contractors and uncovered structural problems throughout the system. The three-year study found as the size of state government shrank, experienced personnel left and the responsibilities for overseeing contractors fell on a limited pool of employees, some of whom were not qualified to perform the work.

“As a consequence, what we have now is largely oversight by audit and expose, which only catches problems after they arise and in many cases only once they have become quite severe,” said Janice Fine, an associate professor of labor studies and employment relations at Rutgers and one of the study’s authors.

Fine contends the lack of oversight underlies a series of reports about mismanagement by contractors, including most recently the handling of Hurricane Sandy housing recovery programs by a Louisiana-based firm.

The state severed ties with the firm, Hammerman & Gainer, Inc., after residents complained of a botched application process. The Fair Share Housing Center found that nearly 80 percent of applicants who appealed denials for grants through two of the programs handled by HGI were successful.

Also, HGI signed a three-year, nearly $68 million contract with the state last spring but charged $51 million for less than eight months of work, according to documents.

“This is really a cautionary tale about what happens in an absolutely critical disaster recovery situation when there’s an outside contractor hired and there’s really no oversight,” said Adam Gordon, staff attorney with the Cherry Hill-based center. “The state ended up spending tens of millions of dollars and did not get the results that it needs to help people return to their homes.”

The study also points to privately-run halfway houses as “perhaps the most egregious example of the dire consequences that can result from a lack of oversight of contractors,” citing reports of inmates who escaped those facilities and then killed or assaulted other people.

Fine said Gov. Chris Christie’s call for a review into opportunities for privatization sparked the idea for the study. But the current issues with oversight developed over time, through both Republican and Democratic administrations, according to the study.
Christie’s office declined to comment.

The study, which relied on an analysis of a broad array of state documents, reports and statutes and interviews with current and former state employees and outside experts, also found problems with the way contracts are structured, including weak performance standards and requirements and a lack of clear performance measures.

“The lack of clearly defined contract terms makes it extremely difficult to ensure that services are being delivered well and cost effectively,” said Patrice Mareschal, associate professor of public policy and administration at Rutgers-Camden and a co-author of the study.

The study’s authors make a series of recommendations for the state to address the issues the report raises, including calling on lawmakers to enact legislation that mandates sufficient resources for overseeing contracts and bans outsourcing oversight activities.

Rutgers University, the New Jersey AFL-CIO and In The Public Interest, a resource center on privatization and contracting, provided financial support for the study.